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Palantir Takes A Tumble Post Earnings – Is The Stock Now A Buy? Analyst Views

Analyst Team trader
Updated 7 May 2024

The Palantir Technologies' (NYSE: PLTR) stock price gapped down this morning post-first-quarter earnings that beat on revenue. To understand the drop in spite of an earnings beat, you have to look to the weight of expectations that now sits with the firm having gained more than 175% over the past 12 months. With the shares down 15% today, a wave of analyst adjustments have come in that might help identify a pathway.

Wedbush Securities has issued guidance suggesting investors to consider the dip as an opportune moment for investment as analyst Dan Ives maintains a positive outlook on the company's prospects.

“We believe any modest sell-off post print is a golden buying opportunity for this pure play AI name.”

Dan Ives

The allure of Palantir lies in its robust AI platform, which according to Ives, is a driving force for strong growth and renders the sell-off as a buying opportunity. Presenting an Outperform rating, Ives argues for a $35 price target on Palantir, signalling considerable confidence in the company's growth trajectory.

Other analysts have also made upgrades on the stock, with 5 boosting forecasts for Palantir through today.

  • RBC Capital are one of those to raise target price, although this one comes with a caveat. The firm keep an ‘underweight' rating on the stock, but do revise upwards their target from a very modest $5, to a mark of $9. This move to the upside on target still reflects a 50% downward expectation, as the firm says the beat and raise was priced in.
  • Deutsche Bank push up their target price on PLTR to $20 (from $18). The firm sees Palantir revenue from Government business “aren't yet seeing similar AI tailwinds as US Commercial.”
  • HSBC raise to $23 (from $22)
  • DA Davidson raise to $24 (from $19)
  • Citi raise to $25 (from $23). This is twice in a week that Citi have increased their price target, after pushing up from $20 to $23 on Sunday.

Investors have reasons to be optimistic as Palantir's growth narrative is buoyed by increasing demand from commercial enterprises and governments alike. This is especially relevant as AI use cases proliferate, presenting more opportunities for Palantir's platform and services.

Adding to this confidence is Palantir's strong performance in the first quarter. The company reported earnings that not only exceeded expectations but also raised its full-year sales guidance to $2.677 billion to $2.689 billion, surpassing analyst projections. This optimistic revision is further complemented by an upward adjustment in the guidance for adjusted income from operations for the entire year.

In anticipation of the second quarter, Palantir is projecting sales in the range of $649 million to $653 million, yet again, exceeding analyst estimates. The adjusted earnings for the first quarter stood at $0.08 per share, with an impressive revenue increase of 20.8% year-over-year, amounting to $634.33 million (against expectations of $625million).

The juxtaposition of market reaction against analyst confidence creates a compelling narrative for Palantir's future. As the company adapts and expands its offerings to meet the growing demand in the AI space, the current market valuation could be seen as a lucrative entry point for both long-term investors and supporters of AI-driven growth.

In conclusion, despite the immediate market response to Palantir's earnings release, the broader financial indicators underscored by analysts potentially point towards growth potential. This might be one to watch for the less aggressive.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.